A South Korean billionaire and tech industry leader was taken into custody on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him out of concern that he might attempt to flee the country or destroy evidence. In a recent meeting with staff, Kim asserted his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of tampering with the stock of SM Entertainment to thwart rival K-pop agency Hybe’s acquisition efforts last year. Both SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on similar stock manipulation charges.
Kim established Kakao in 2010, and he holds approximately a 24% stake in the company, which had more than 10,000 employees as of 2020. At one time, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock saw a decline of 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate that the company can operate effectively without its founder.